Exhibit 99.3
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following unaudited pro forma combined condensed financial data combines the historical supplemental consolidated condensed financial statements of First Community, which have been restated to reflect the effect of the First Community Bank of the Desert merger accounted for on a pooling-of-interests basis and the historical condensed financial statements of Professional Bancorp, giving effect to the merger as if such transaction had been effective on September 30, 2000, with respect to the Unaudited Pro Forma Combined Condensed Balance Sheets, and as of the beginning of the periods indicated, with respect to the Unaudited Pro Forma Combined Condensed Statements of Income. The information with respect to the merger is presented under the purchase method of accounting. The information for the nine months ended September 30, 2000 is derived from the unaudited consolidated financial statements of First Community and Professional Bancorp, which include, in the opinion of the managements of First Community and Professional Bancorp, respectively, all adjustments (consisting only of normal accruals) necessary to present fairly the data for such periods. This information should be read in conjunction with the historical and supplemental consolidated financial statements of First Community and Professional Bancorp including the respective notes thereto, which are included in this report on Form 8K, and in conjunction with the combined condensed historical selected financial data and other unaudited pro forma combined financial information including the notes thereto, appearing in the proxy statement/prospectus dated November 10, 2000. The unaudited pro forma combined condensed financial data does not give effect to any operating efficiencies anticipated in conjunction with the merger.
The Unaudited Pro Forma Combined Condensed Balance Sheet is not necessarily indicative of the actual financial position that would have existed had the merger been consummated on September 30, 2000, or that may exist in the future. The unaudited pro forma combined condensed statements of operations are not necessarily indicative of the results that would have occurred had the merger been consummated on the dates indicated or that may be achieved in the future. Assuming the consummation of the merger, the actual consolidated financial position and results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein because (1) assumptions used in preparing such pro forma data may be revised in the future due to changes in values of assets and changes in operating results between the dates of the unaudited pro forma financial data and the date on which the merger takes place, (2) adjustments may need to be made to the unaudited historical financial data upon which such pro forma data are based, or (3) a variety of other factors.
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UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
September 30, 2000
First First Community Professional Community Bancorp Bancorp Pro Forma Bancorp (Historical) (Historical) Adjustments Pro Forma ------------------------------------------------- ---------------- (In thousands, except per share data) Assets: Cash and due from banks $ 28,868 $ 22,367 $ (8,904) (a) $ 42,331 Federal funds sold 27,832 78,650 106,482 ------------------------------------------------- ---------------- Total cash and cash equivalents 56,700 101,017 (8,904) 148,813 Time deposits in financial institutions 2,364 380 2,744 Federal Reserve Bank and Federal Home Loan Bank stock, at cost 908 405 1,313 Securities held to maturity 9,162 15,155 24,317 Securities available-for-sale 39,298 47,665 86,963 ------------------------------------------------- ---------------- Total securities 49,368 63,225 - 112,593 Net loans 235,101 110,508 345,609 Premises and equipment 5,325 900 6,225 Goodwill - - 2,421 (b) 2,421 Other real estate owned 1,315 - 1,315 Other assets 5,918 10,996 1,077 (c) 17,991 ------------------------------------------------- ---------------- Total assets $ 356,091 $ 287,026 $ (5,406) $ 637,711 ================================================= ================ Liabilities and Shareholders' Equity Liabilities: Non-interest bearing deposits $ 107,561 $ 119,815 $ 227,376 Interest bearing deposits 208,412 147,006 355,418 ------------------------------------------------- ----------------- Total deposits 315,973 266,821 - 582,794 Borrowed funds 1,517 - - 1,517 Convertible notes - 679 679 Trust preferred securities 8,000 - 8,000 Accrued interest payable & other liabilities 4,157 2,541 4,103 (d) 10,801 ------------------------------------------------- ---------------- Total liabiltities 329,647 270,041 4,103 603,791 Shareholders' Equity: Common stock 20,029 17 7,459 (e) 27,505 Additional paid-in-capital 21,271 (21,271) (f) - Treasury stock (537) 537 (g) - Retained earnings 6,815 (1,889) 1,889 (h) 6,815 Unrealized net gains (losses) on investments available-for-sale, net (400) (1,877) 1,877 (i) (400) ------------------------------------------------- ---------------- Total Shareholders' Equity 26,444 16,985 (9,509) 33,920 Total Liabilities ------------------------------------------------- ---------------- & Shareholders' Equity $ 356,091 $ 287,026 $ (5,406) $ 637,711 ================================================= ================ Number of common shares outstanding 3,958.4 2,030.8 4,463.1 Common shareholders' equity per share $ 6.68 $ 8.36 $ 7.60
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED DATA."
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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
Nine months ended September 30, 2000
First First Community Professional Community Bancorp Bancorp Pro Forma Bancorp (Historical) (Historical) Adjustments Pro Forma ------------------------------------------------ --------------- (In thousands, except per share data) Interest income: Interest and fees on loans $ 17,690 $ 9,306 $ - $ 26,996 Interest on interest-bearing deposits in financial institutions 212 27 - 239 Interest on investment securities 2,097 3,029 - 5,126 Interest on federal funds sold 1,229 2,123 - 3,352 ------------------------------------------------ --------------- Total interest income 21,228 14,485 - 35,713 Interest expense: Interest expense on deposits 5,509 2,643 - 8,152 Interest expense on borrowings and convertible notes 129 37 565 (j) 731 ------------------------------------------------ --------------- Total interest expense 5,638 2,680 565 8,883 ------------------------------------------------ --------------- Net interest income: 15,590 11,805 (565) 26,830 Less: provision for loan losses 180 4,547 - 4,727 ------------------------------------------------ --------------- Net interest income after provision for loan losses 15,410 7,258 (565) 22,103 Non-interest income: Service charges, commissions and fees 973 749 - 1,722 Other income 845 4,627 - 5,472 ------------------------------------------------ --------------- Total non-interest income 1,818 5,376 - 7,194 Non-interest expense: Salaries and employee benefits 5,120 5,619 - 10,739 Occupancy, furniture and equipment 1,865 1,655 - 3,520 Professional and other services 1,461 1,991 - 3,452 Stationery, supplies and printing 232 556 - 788 FDIC assessment 42 222 - 264 Cost of other real estate owned 40 - - 40 Advertising 310 157 - 467 Insurance 96 104 - 200 Loss on sale of securities 11 - - 11 Merger costs 3,561 - - 3,561 Goodwill amortization - - 120 (k) 120 Other 1,547 998 - 2,545 ------------------------------------------------ --------------- Total non-interest expense 14,285 11,302 120 25,707 ------------------------------------------------ --------------- Income before income taxes 2,943 1,332 (685) 3,590 Income taxes (benefits) 2,012 - (237) (l) 1,775 ------------------------------------------------ --------------- Net income $ 931 $ 1,332 $ (448) $ 1,815 ================================================ =============== Per share information: Number of shares (weighted average) Basic 3,888.1 2,030.8 4,392.8 Diluted 4,076.8 2,030.8 4,581.5 Income per share Basic $ 0.24 $ 0.66 $ 0.41 Diluted $ 0.23 $ 0.66 $ 0.40
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED DATA."
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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
Year Ended December 31, 1999
First First Community Professional Community Bancorp Bancorp Pro Forma Bancorp (Historical) (Historical) Adjustments Pro Forma ------------------------------------------- ------------ Interest income: Interest and fees on loans $ 19,056 $ 12,762 $ - $ 31,818 Interest on interest-bearing deposits in other banks 355 49 - 404 Interest on investment securities 2,614 4,375 6,989 Interest on federal funds sold 1,380 1,109 - 2,489 ----------------------------------- ---------- Total interest income 23,405 18,295 - 41,700 Interest expense: Interest expense on deposits 5,648 3,259 - 8,907 Interest expense on borrowings and convertible notes 40 154 840 (j) 1,034 ----------------------------------- ---------- Total interest expense 5,688 3,413 840 9,941 ----------------------------------- ---------- Net interest income: 17,717 14,882 (840) 31,759 Less: provision for loan losses 518 13,993 - 14,511 ----------------------------------- ---------- Net interest income after provision for loan losses 17,199 889 (840) 17,248 Non-interest income: Service charges, commissions and fees 1,511 1,265 - 2,776 Net gain (loss) on sale of securities available-for-sale (2) 40 - 38 Other income 793 547 - 1,340 ----------------------------------- ---------- Total non-interest income 2,302 1,852 - 4,154 Non-interest expense: Salaries and employee benefits 5,853 6,545 - 12,398 Occupancy, furniture and equipment 2,168 2,326 - 4,494 Professional and other services 1,695 2,407 - 4,102 Stationery, supplies and printing 378 668 - 1,046 FDIC assessment 55 56 - 111 Cost of other real estate owned 182 - - 182 Advertising 339 522 - 861 Insurance 120 133 - 253 Goodwill amortization - 160 (k) 160 Other 1,281 1,643 - 2,924 ----------------------------------- ---------- Total non-interest expense 12,071 14,300 160 26,531 ----------------------------------- ---------- Income (loss) before income taxes 7,430 (11,559) (1,000) (5,129) Income taxes (benefits) 3,166 (3,199) (353) (l) (386) ----------------------------------- ---------- Net income (loss) $ 4,264 $ (8,360) $ (647) (4,743) =================================== ========== Per share information: Number of shares (weighted average) Basic 3,863.1 2015.2 4,367.8 Diluted 4,076.5 2015.2 4,581.2 Income (loss) per share Basic $ 1.10 $ (4.15) $ (1.09) Diluted $ 1.05 $ (4.15)(a) $ (1.09) (a) Affect is anti-dilutive
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NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
NOTE 1: BASIS OF PRESENTATION
Certain historical data of Professional Bancorp have been reclassified on a pro forma basis to conform to First Community's classifications.
NOTE 2: PURCHASE PRICE AND FUNDING
The purchase price is based on $8 per share for Professional Bancorp shareholders receiving the cash consideration and an exchange ratio of 0.55 First Community shares for Professional Bancorp shareholders receiving the stock consideration. Based on the $14.81 closing price of First Community on the day prior to the completion of the merger, those Professional Bancorp shareholders choosing the stock consideration received a value of $8.15 per share.
The total consideration to be paid in connection with the merger is calculated as:
Stock Cash Consideration Consideration Total --------------- ---------------- -------------- Professional common shares outstanding 917,722 1,113,032 2,030,754 Exchange ratio 0.55 -------------- 504,747 1,113,032 Value received $ 14.81 $ 8.00 -------------- --------------- ------------- Total purchase price $ 7,475,305 $ 8,904,256 $ 16,379,561 ============== =============== =============
The cash portion of the purchase price was financed through a combination of the issuance of $8 million of trust preferred securities which occurred in September, a revolving line of credit and dividends from First Community's subsidiary banks. (Note: Trust preferred securities count as Tier 1 capital for regulatory purposes.)
Professional Bancorp shareholders had the option to elect cash of $8 or 0.55 shares of First Community common stock for each share of Professional Bancorp common stock owned. Based upon the elections, 917,722 shares of Professional Bancorp Common Stock will be exchanged for approximately 504,747 shares of First Community Common Stock and 1,113,032 shares of Professional Bancorp Common Stock will be exchanged for approximately $8,904,000.
As a result of the issuance of trust preferred, historical interest expense on the accompanying pro forma combined condensed statements of operations for the nine months ended September 30, 2000, and the year ended December 31, 1999, has been increased by $565,000 and $840,000, respectively, representing the interest expense on the trust preferred.
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NOTE 3: ALLOCATION OF PURCHASE PRICE
The purchase price of Professional Bancorp has been allocated as follows (in thousands):
Cash and cash equivalents $ 101,017 Time deposits in financial institutions 380 Securities 63,225 Net loans 110,508 Goodwill 2,421 Premises and equipment 900 Other assets 12,073 Deposits (266,821) Borrowed funds (679) Other liabilities (6,644) ---------------- Total purchase price $ 16,380 ================
In allocating the purchase price, the following adjustments were made to Professional Bancorp's historical amounts. Other liabilities were increased by $4,103,000, representing the estimated merger costs. Other assets were increased by $1,077,000, representing the tax effects of the estimated merger costs. Substantially all of other assets and liabilities are either variable rate or short-term in nature and fair market value adjustments were considered to be immaterial to the financial presentation. Goodwill is amortized on a straight line basis over fifteen years.
NOTE 4: MERGER COSTS
The table below reflects First Community's current estimate, for purposes of pro forma presentation, of the aggregate estimated merger costs of $4,103,000 ($3,026,000 net of taxes, computed using the combined federal and state tax rate of 42.0%) expected to be incurred in connection with the merger. While a portion of these costs may be required to be recognized over time, the current estimate of these costs has been recorded in the pro forma combined balance sheet in order to disclose the aggregate effect of these activities on First Community's pro forma combined financial position. The estimated aggregate costs, primarily comprised of anticipated cash charges, include the following:
Employee costs (severance and retention costs) $ 1,995,000 Conversion costs 400,000 Other costs 170,000 ---------------- 2,565,000 Tax benefits 1,077,000 ---------------- 1,488,000 Investment banking and other professional fees 1,538,000 ---------------- $ 3,026,000 ================
First Community management's cost estimates are forward-looking. While the costs represent First Community management's current estimate of merger costs associated with the merger that will be incurred, the ultimate level and timing of recognition of such costs will be based on the final integration in connection with consummation of the merger. Readers are cautioned that the completion of this integration and other actions that may be taken in connection with the merger will impact these
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estimates. The type and amount of actual costs incurred could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs.
NOTE 5: KEY TO PRO FORMA ADJUSTMENTS
Summarized below are the pro forma adjustments necessary to reflect the acquisition of Professional Bancorp based on the purchase method of accounting:
a) | Use cash as part of the cash portion of the purchase price. See note 2. |
b) | Reflect goodwill resulting from the purchase method of accounting. See note 3. |
c) | Reflect the deferred tax asset related to the deductible merger costs. See note 4. |
d) | Adjust liabilities for accrued merger costs. See note 4. |
e) | Reflect issuance of common stock to Professional Bancorp shareholders. |
f) | Eliminate Professional Bancorp additional paid-in-capital. |
g) | Eliminate Professional Bancorp treasury stock. |
h) | Eliminate Professional Bancorp retained losses. |
i) | Eliminate Professional Bancorp unrealized losses on securities available-for-sale. |
j) | Interest expense related to the issuance of trust preferred. |
k) | Amortization of goodwill on a straight-line basis over fifteen years. |
l) | Tax benefits associated with the additional interest expense. |
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